On Sept. 18 last year, Chang Sen-wen (張森文), the owner of a pharmacy in Miaoli County’s Dapu Borough (大埔), was found dead in an irrigation canal near the site of his old home. Chang had faced forced eviction and the demolition of his home alongside the homes of three others.
He is thought to have committed suicide after becoming depressed following the demolition. The news shocked Taiwan.
The Greater Taichung High Administrative Court recently ruled that the Miaoli County government’s demolition of the houses was illegal. The Ministry of the Interior may choose to not appeal the verdict and let victory lie with the four families. However, no matter what is done, Chang cannot be brought back to life.
Taiwanese have failed to pay attention to the series of farmers in China who have set themselves on fire in protest after having lost their land when the local land and real-estate bubble burst.
In 1994, China implemented a “tax-sharing system.” Under this system, most of the taxes from business operations and individual income go to the central government, while local governments are left with such public expenditures as social welfare and education. As local governments’ finances worsened under the system, exports decreased as a result of the global economic crisis and capital for stimulating domestic consumption went into the real-estate market, local Chinese governments came to rely even more on revenue from land and real-estate taxes. As land seizures increased due to collusion between government and business interests, there have been continuous protests among affected farmers.
There may seem to be a world of difference between how local governments in China have used land-based fiscal policies to cause farmers to lose their property and the guarantee of land ownership rights offered in democratic Taiwan. However, a closer look at policies in Taiwan reveals the similarity of the property seizures that occur on both sides of the Taiwan Strait resulting from the collusion between government and business interests.
For the past 15 years, the adjustments made to administrative divisions in Taiwan and the changes to the allocation of tax revenue between the central and local governments have not been helpful to local autonomy in general and local financial autonomy in particular.
After a constitutional amendment froze the Taiwan Provincial Government in 1997, most of the provincial government’s revenue went to the central government. Starting in 2009, decreases in the inheritance tax and other taxes were partially absorbed by local governments, who also had to pick up increases in costs for civil servants and teachers, as well as infrastructure maintenance costs. As central and local governments’ debt worsened, cities and counties with larger populations have been seeking special municipality status to get access to more money. Selling state-owned land and using zone seizures to make money have now become essential to local governments’ finances.
Recently, funds from cross-strait business groups with political backing have been flowing into Taiwan. Some local officials have aligned themselves with this money and copied the Chinese government’s land-enclosure methods. The passage of the service trade agreement with China would bring a large influx of Chinese capital and cause a real-estate bubble in Taiwan. In this situation, collusion between business and government will only get worse. Even if the ministry does not appeal the decision on the Dapu case, it marks only the beginning of the financial crisis and land enclosures that will be carried out by government and business interests.